Roy Morgan Research’s business confidence survey in May showed a decline for the third consecutive month.
The May result of 113.8, while still a positive score, was well down on the April figure of 120.0 and represents a concerning trend for economic recovery in Australia. These results are from 3052 interviewers with business decision makers across Australia during May 2013.
The drop in confidence is due in large part to a decline in the number of businesses reporting that they were feeling positive about economic conditions in Australia over the last 12 months which has dropped from 66% in April to only 59% in May and is now at the lowest level since October 2012.
This decline in the economic outlook for the next 12 months has obviously impacted on business investment intentions with only 53% now considering that the next 12 months would be a good time “to invest in growing the business”. This is the lowest level this year.
All states showed a decline in business confidence in May, with WA, NSW and Victoria still above the national average although WA has clearly lost the big lead it once had. The feeling among businesses in SA, QLD and Tasmania remains the most negative with all of them below national average.
The most positive industry remains “Finance and Insurance” (138.6) followed by “Mining” (129.3), “Education and Training” (129.1), and “Health Care and Social Assistance” (129.1). Confidence level in the “Manufacturing” sector has declined further to 105.5, “Construction” is a little weaker in May (down to 114.5 from 116.1) and “Retail” is holding fairly steady on 119.0 (down from 120.4 in April).
These results also align with the fall in the Roy Morgan Consumer Confidence in May falling from 121.9 in April to 115.3. Both Roy Morgan confidence figures are based on interviews conducted throughout the month.
Norman Morris, industry communications director, Roy Morgan Research, says: “The number of negative events that occurred in May appears to have impacted business confidence in Australia; these included the Ford decision to cease manufacturing in Australia, the new budget which finally admitted to a deficit, the stock market decline by 5% and the continued uncertainty in the global economic situation.
“The decision to cut the official interest rate by 0.25% points in May was obviously insufficient to counter the negative local and global events that are impacting on business sentiment. The decline in the Australian dollar over the month should benefit some industries but will have a negative impact on others.”
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